2025 (10) TMI 543 - HC - GST

Appeal allowed under Section 107 CGST Act due to denial of hearing and refused adjournments

HC found that the adjudicating authority passed the impugned order without hearing the petitioner after refusing adjournments, raising natural justice ... Availment of ineligible credit - Validity of SCN - issuance of invoices without any supply from certain fake firms - Petitioner had sought an adjournment before the Adjudicating Authority, which was not granted - violation of principles of natural justice - HELD THAT:- The Court notices that the impugned order which was passed in February, 2025 was not followed by any subsequent communication by the Petitioner. No request was made for a clear copy of the order. The Petitioner was all along aware of the proceedings against it. Notably, the limitation period for filing of the appeal has expired. However, the fact remains that certain adjournments were sought by the Petitioner, which appeared to have not been acceded by the GST Department, leading to the impugned order without hearing this Petitioner. This Court is therefore inclined to permit the Petitioner to avail of its appellate remedy in accordance with law under Section 107 of the CGST, Act. Let the appeal challenging the Impugned Order, be filed by 30th November, 2025. ISSUES PRESENTED AND CONSIDERED 1. Whether the denial of an adjournment and summary passing of an order without granting hearing constitutes a violation of the principles of natural justice warranting interference under Article 226. 2. Whether an impugned adjudication order uploaded in an illegible/compressed form and not supplied in clear form to the affected party constitutes denial of fair opportunity and affects the limitation for filing an appeal. 3. Whether the Court should permit filing of an appeal beyond the period of limitation where the affected party contends it was not heard, and what interim or corrective relief (including adjustment of pre-deposit) is appropriate under Section 107 of the CGST Act. 4. Whether the deposited amount by the taxpayer can be adjusted towards the pre-deposit required for instituting an appeal against the impugned order. 5. Whether the appellate authority should be directed to adjudicate the appeal on merits and whether the barred-by-limitation plea should be negatived where the Court permits filing within a stipulated extended period. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Denial of adjournment and hearing; violation of principles of natural justice Legal framework: Principles of natural justice require that an affected party be given a reasonable opportunity of hearing before adverse adjudicatory action is taken; statutory adjudication under the CGST Act must conform to audi alteram partem where appropriate. Article 226 permits judicial review of administrative orders for breach of natural justice. Precedent Treatment: The judgment does not cite or apply specific precedents; the Court applies established constitutional and administrative law principles concerning hearing and fair opportunity. Interpretation and reasoning: The Court noted the petitioner had sought adjournments which were not acceded to and that summary orders of the same date were passed raising demands for different periods without an effective hearing. However, the Court also observed that the petitioner did not thereafter seek further communications or a clear copy of the order and remained aware of the proceedings. Balancing these facts, the Court recognized an apparent breach in opportunity to be heard but weighed it against the petitioner's subsequent inaction. Ratio vs. Obiter: Ratio - Where adjournment requests are refused and an order is passed without hearing, such circumstances engage natural justice and warrant judicial intervention to preserve appellate remedies; the institutional duty remains to ensure a fair opportunity before final adverse orders. Obiter - The petitioner's failure to follow up for a clear copy is a relevant factual consideration but does not negate the initial defect. Conclusions: The Court found sufficient concern about denial of hearing to grant relief in the form of permitting appellate remedy, rather than quashing the order outright. The finding supports remedial relief where procedural fairness is questioned. Issue 2 - Impugned order illegible on portal; effect on fairness and limitation Legal framework: Procedural fairness includes the right to be furnished with intelligible and accessible orders. Statutory limitation for filing appeals runs from availability of the order, but equitable considerations may apply where official processes impede access. Precedent Treatment: No precedents were invoked; the Court treated accessibility of orders as a factor in remedial discretion. Interpretation and reasoning: The petitioner alleged the order was uploaded in an illegible/compressed format and could not be properly downloaded. The Court accepted that the impugned order was not available in proper form to the petitioner and therefore directed the respondent to supply a clear copy within one week. Simultaneously, the Court noted that the petitioner had not requested a clear copy earlier, which tempered relief but did not preclude corrective steps. Ratio vs. Obiter: Ratio - Unclear or inaccessible official orders may justify judicial directions to supply clear copies and may influence equitable extension of time for appeal. Obiter - The petitioner's failure to promptly request a clear copy is a factor but not determinative. Conclusions: The Court directed supply of the clear copy and treated inaccessibility as a ground to afford relief in the appellate context. Issue 3 - Permitting appeal beyond limitation; interplay with Section 107 CGST Act Legal framework: Section 107 of the CGST Act prescribes appellate remedy and pre-deposit requirements. Courts exercising writ jurisdiction under Article 226 may, in appropriate cases involving procedural infirmity or breach of natural justice, permit extension of time or grant leave to file appeals notwithstanding limitation, subject to conditions and equitable adjustments. Precedent Treatment: The Court did not cite case law but applied established principles that supervisory jurisdiction can be used to secure effective statutory remedies where procedural prejudices have occurred. Interpretation and reasoning: The Court observed that the limitation period for filing the appeal had expired. Given that adjournments requested by the petitioner were not apparently granted and that there was an arguable denial of hearing, the Court exercised its discretion to permit the petitioner to file an appeal under Section 107 within a stipulated extended period. The Court conditioned relief on filing by a fixed date and ensured the appeal would not be barred by limitation if filed within that timeframe. Ratio vs. Obiter: Ratio - Where procedural unfairness (including lack of hearing and inaccessible orders) has operated to deprive a party of effective appellate remedies, the writ Court may permit filing of an appeal beyond statutory limitation and direct that the appeal not be treated as time-barred. Obiter - The precise standard for such indulgence (e.g., requirement of demonstrating bona fide attempts to seek a hearing or copy) is not exhaustively delineated here. Conclusions: The Court allowed the appeal to be filed by a specified date and directed that it shall not be treated as barred by limitation if so filed. Issue 4 - Adjustment of deposit already made towards pre-deposit for appeal Legal framework: Section 107 requires pre-deposit for entertaining certain appeals; amounts already deposited towards an adjudication demand can, in equity and practicality, be adjusted against pre-deposit obligations where appropriate to facilitate appellate remedy. Precedent Treatment: No authority cited; the Court applied practical equitable adjustment to prevent multiplicity of payments and to facilitate access to appeal. Interpretation and reasoning: The petitioner had deposited a substantial amount with the respondent. The Court directed that the amount already deposited be adjusted towards the pre-deposit required for filing the appeal, thereby enabling the petitioner to meet statutory pre-deposit requirements without making duplicative payments. Ratio vs. Obiter: Ratio - Deposits already made towards the impugned demand can be adjusted against the statutory pre-deposit for filing an appeal to secure effective exercise of appellate remedy. Obiter - The judgment does not formulate a general rule for all fact patterns but applies the principle on the facts before the Court. Conclusions: The Court ordered adjustment of the deposited sum against the pre-deposit requirement for the appeal. Issue 5 - Direction for adjudication on merits and limitation-bar assurance Legal framework: Appellate authorities are to adjudicate appeals on merits if admissible; writ courts may secure such adjudication by clearing procedural hurdles that would otherwise prevent merits determination. Precedent Treatment: No precedents cited; the Court enforced the right to merits adjudication once procedural relief is granted. Interpretation and reasoning: By permitting the appeal to be filed within an extended time and ensuring the pre-deposit requirement is met by adjustment, the Court directed that the appeal be adjudicated on merits and not to be treated as barred by limitation. This preserves the substantive rights of the parties where procedural deficiencies had impeded appeal. Ratio vs. Obiter: Ratio - Where a writ Court grants leave to file a delayed appeal for compelling procedural fairness reasons and ensures pre-deposit compliance, the appellate authority must adjudicate the appeal on merits without rejecting it as time-barred. Obiter - The adjudicatory timeline and scope of appellate review are left to the appellate authority in accordance with law. Conclusions: The Court ordered that any appeal filed within the stipulated extended period shall be adjudicated on merits and shall not be treated as barred by limitation; it also disposed of the petition on these terms and directed supply of a clear copy of the impugned order.